This post should be short.? I trolled through four of the insurance companies that I own today to try to ascertain what credit risk they might have.? I was pleasantly surprised that all of them had steered clear of the current lending crises, and the level of exposure to financials, and their junior debt was low.? (No PIIGS debt either. The conservatism of US life insurers, at least in this sample, is impressive.)

My only surprise was one company that had a lot of publicly traded equities.? Oh, and another that had several profitable private subsidiaries involved in financial businesses.

In 2008, life insurers got drubbed because they owned hybrid securities that offered high yields if markets were calm/high, but capital losses if the markets got rough.? Worst of both worlds in exchange for yield: junk bond yields if things are good, stock market losses if things are bad.? But those aren’t evident on the balance sheets I looked at today.

Now, I’m not omniscient.? I only looked through the Schedules A-DB on the Statutory statements, and scanned for problem credits at a high speed.? But if what I read is correct, either I am good/conservative with the insurers that I own, or the insurance industry as a whole has been careful after past losses.

This happened once/twice before, as CDOs failed in 1998-1999, and also in 2002.? After that insurers began reducing exposure to CDOs and other low-rated structured products.

Once burned twice shy?? Probably with life insurers.

I have a few more insurers to review, but I can tell you that I am not worried about asset quality at the insurers that I reviewed today.